* Asia shares up 1.4 pct, commodities boost resource plays
* Seoul shares buck trend and slip as c.bank rate hike eyed
* Aussie hits 14-mth high, rally extends after RBA hike
* Gold slips but holds near record high
By Eric Burroughs
HONG KONG, Oct 7 (Reuters) - Asian shares pushed up for a
second day on Wednesday, with Taiwan's benchmark index nearing
a 16-month high, as growing confidence in a strengthening
global recovery boosted resource and financial companies.
European shares, however, were set for a sluggish start,
with futures on the Euro Stoxx 50 index <STXEc1> little changed
in early trade.
Gold trimmed some gains but hovered near the all-time high
of $1,043.45 <XAU=> hit on Tuesday, highlighting the dollar's
woes after the U.S. currency was hit the previous day by a
report that major countries were looking at alternatives to the
greenback for settling oil trades, including gold and other
currencies.
The report was later denied by some of the countries said
to be involved.
U.S. crude oil prices rose 59 cents a barrel to $71.46
<CLc1>, adding to gains scored the previous day as commodities
surged on hopes that global demand was picking up.
Australian miners and Japanese trading houses were among
the big winners, with shares of Rio Tinto <RIO.AX> and
Mitsubishi Corp <8058.T> both jumping more than 5 percent.
Some investors also took heart from Australia's central
bank lifting interest rates the previous day, the first of any
Group of 20 nation to do so in a sign that the emergency
measures put in place to stem the financial crisis are
gradually being unwound.
The Australian dollar <AUD=D4> hit a 14-month high above
$0.892 as investors bet on more rate rises later this year
after the surprise quarter-point hike to 3.25 percent. The rate
increase was seen as a sign the global economy was on the mend
and fueled gains of more than 1 percent on Wall Street. []
"The RBA set the cat amongst the pigeons by becoming the
first G20 central bank to hike rates. The move likely
accelerated the issue of yield re-emerging as a key currency
driver the coming months," said analysts at Calyon in a note to
clients. "The hike is unlikely, however, to be quickly followed
by the U.S., Japan or Europe."
Some economists noted that Australia is a special case
because its economy and banking system were mostly sheltered
from the global crisis and has benefitted from China's
aggressive efforts to stockpile resources and kick start
growth.
Many major central banks are unlikely to raise rates for
some time, trying to ensure there is no dip back into
recession.
Federal Reserve officials remain cautious about unwinding
emergency measures. Kansas City Fed President Thomas Hoenig
said late on Tuesday that the U.S. economy is clearly
recovering but that it is too soon for the Fed to withdraw its
massive support. []
The MSCI index of Asia-Pacific shares outside Japan
<.MIAPJ0000PUS> was up 1.4 percent, with the material sector
the biggest gainer on the day. The Thomson Reuters index of
regional shares <.TRXFLDAXPU> edged up 1 percent.
Japan's Nikkei average <> gained 1.2 percent, with
financials getting a boost from a rise in U.S. counterparts the
previous day after Goldman Sachs upgraded the sector. The
banking sector on the Tokyo Stock Exchange first sector rose
3.6 percent.
But South Korea's KOSPI index <> lagged the region
with a rise of just 0.2 percent as investors fretted the
country's central bank could follow Australia and lift rates
from a record low as soon as a policy meeting on Friday.
Many market players are now expecting the Bank of Korea to
lift rates in November from the current 2.0 percent.
Trading volumes were about average across the region, and
short-covering in some sectors such as financials played a role
in the rise.
DOLLAR ON THE BACKFOOT
The dollar edged up after being hit the previous day by the
combination of a surging Australian dollar, gold and
commodities.
The dollar index, a gauge of its performance against six
major currencies, drifted down 0.1 percent to 76.262 <.DXY> but
is still near a 13-month low of 75.827 hit in September.
The dollar edged down 0.3 percent against the yen to 88.55
yen <JPY=> and has slid back near an eight-month low of 88.23
yen hit last month. Those levels are seen as painful to
Japanese exporters by slashing the value of their overseas
revenue.
Japanese Finance Minister Hirohisa Fujii told the Wall
Street Journal that current yen levels were consistent with
acceptable market activity and were not "extremely abnormal,"
the latest signal Japan's new government is taking a more
hands-off approach on currency policy. []
Fujii and other officials have made remarks suggesting they
could intervene to stem yen strength, though many market
players believe such intervention is unlikely unless the yen's
rise becomes more volatile.
Government bonds were mixed as traders reassessed interest
rate prospects.
Korean bond futures <KTBc1> erased earlier losses and
drifted up 3 ticks to 108.78, bouncing back from Tuesday's
slide after Australia's rate hike was seen as paving the way
for a move in South Korea, where the central bank is worried
about a rebounding property market.
(Editing by Kim Coghill)
(eric.burroughs@thomsonreuters.com; +852 2843 1652; Reuters
Messaging: eric.burroughs.reuters.com@reuters.net))
